Benefits of Residual Income

"By working faithfully eight hours a day you may eventually get to be boss and work twelve hours a day." - Robert Frost

"Family, religion, friends.. these are the three demons you must slay if you wish to succeed in business." - Monty Burns

  

Not me.  That is not how I envisioned my life.

Last week I posted about the difference between Linear and Residual Income.  Keep in mind, residual income pays you long after for work you've already completed.  I also listed a few ideas on how to generate residual income.

This week, I want to talk about how this can benefit you. 

The prospect of starting a home business was a little daunting and scary to me 3 years ago.  I had never done anything like it before, I had always been a pay per hour worker.  I needed to replace my former teaching salary as soon as possible.

Within my first few months working I was able to bring in a good monthly income, which was great because shortly after starting my business, my 18 month old son was diagnosed with Autism.  Obviously, my business took a back seat.  I did not work regular hours for months as we were going through evaluations, lining up therapists, and emotionally dealing with what we just learned.  I spent more hours doing therapy and research than working my business. Yet I still got paid. That is the benefit of residual income.  I still got a check each month for work I had done my first few months in the business even though I was not working.

Time went on, we got our life back in order and I reorganized and prioritized my schedule.  My monthly income from my home business continued to grow as I worked.

Once again, that extra income was amazing because we were then hit with another blow.  At 6 months pregnant, we were told that our 2nd son would come out with health problems.  I took the time to research and prepare and after he was born, our life completely changed for about 2 months.  He was very sick, in the NICU, and almost lost his life twice.  A blood transfusion was what finally saved him.  During those months I did nothing in the way of working my business.  Yet I still got paid. I was able to take the time to be with my son in the NICU, care for my then toddler with special needs, and still make a monthly income that could help with groceries and bills.

Residual income; getting paid for work I had already done, allowed the pressure to be taken off my husband, the only member of our house with a salaried job. 

It allowed me to take time to care for and provide the best help possible for my son with Autism. 

It allowed me to be at my newborn's side as he fought for his life. 

What can the power of Residual Income do for you?

What is Residual Income?

Residual income is when you continue to profit and earn money for actions that have since been completed.  Rather than getting paid linear income, which is money earned per hour of work, you continue getting paid long after the work is done. 

I designed this chart to illustrate the comparison. Notice the continual rise of the residual income over time, even though less effort is being put in, versus the linear income, where income doesn't change unless time and effort are increased.  

Some benefits of residual income are:

• Financial Independence:  Getting paid for weeks, months, and even years for a job you completed in the past is an excellent way to pay off debt, make investments, or add to savings. 

• Time:  You still receive money, while not spending the time working!  You can then take that time and use it for other things like family time, vacations, or even generating more residual income. 

• Get paid for the rest of your life:  Compared to linear income, residual income makes sense.  With an honest hard working job you get paid once for that work, but with residual income, you get paid continuously for a long period of time, possibly even for life!

Some ways to earn residual income include:

• Having rental properties with paid mortgages; the rent is your residual income
• Writing a book, a song, or acting; the profits made from book sales, music sales, or money drawn from TV shows, movies, or commercials are your residuals
• An investment or savings plan that pays you residuals in the form of interest or dividends
• Referral, affiliate, or associate programs; where you receive compensation for marketing and referring customers.  Some of these programs have a one-time compensation plan and a few credible ones have long term residual compensation plans. 

Those are only a few ideas of ways to earn residual income.  Some are not possibilities for everyone because they require certain skills and talents, or a large start up fee or investment.  If you have any questions about residual income please don't hesitate to contact me. 

Check back next week, I will be posting more about the benefits of residual income and about what it has done for me. 

Be sure to also visit me at my personal blog: Mommy To Two Boys